The Rise of the Private Label

by Andrew Hoeft | Jul 12, 2016 12:00:00 AM

In the recent years of increasing private labels there are two main questions that must be asked now; can private label rise to the level of that in Europe here in the states? Even more importantly, does the retail industry want this to be the case?

Let us begin by answering the second question in the negative. As for the majority of retailers in the states, there is great comfort where private label and overall sales are now. One concern is that if the stores private labels over-saturate and populate the majority of the shelf space, it is presumed that shopper satisfaction will go down for those still interested in nationally recognized brands.

Now, about 21 percent of total store sales are made up of private label purchases across the country. As compared to Europe, private level sales make up over 40 percent, while other countries exceed well over 50 percent of total sales.

It is important to note that national brands are not quite out of the shoppers loop in the states given that many shoppers make it clear that they still enjoy having options to buy both national and private despite acknowledging the lower price points and higher quality of private label products.

My last question is this:

What can we expect to happen next in the years to come? Most experts inform us that during economic recessions, private label sales can climb as high as 27 percent of total store sales, while floating around the upper teens during times of prosperity. If customers want more private labels, there are some retailers who built around private labels such as Trader Joe’s and Aldi’s that are always at their disposal.

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